Legal Settlements
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This section includes information about income received through legal settlements.
Policy
Income from Legal Settlements may be countable income in the month received or as a resource.
Countable income is used to determine an income budget. (See Income Budgeting to see how FAA determines the income budget.) FAA needs to know about income that is both countable and not countable to determine whether a budgetary unit’s expenses are exceeding their income. (See Income Eligibility for more information about how FAA uses countable and not countable income.)
For NA, any portion of the settlement that is designated to pay for the budgetary unit’s expenses should be treated as a reimbursement.
NOTE This does not include any expense that is considered a normal living expense as defined in Standard of Basic Needs(g).
For CA, legal settlements received in payments, less any attorney fees, are countable as income in the month received.
Legal settlement payments made by any of the following are exceptions to this policy and have their own specific policies that need to be followed:
●Agent Orange
●Hemophilia Relief Fund Settlement
●Nazi Persecution
●Phen-Fen
●Radiation Exposure Compensation Act
●Spina Bifida and Covered Birth Defect
●USA Patriot Act of 2001
●Uniform Services Former Spouse Protection Act
●Victims of Crime Act (VCA) Benefits
●Wartime Relocation of Civilians Law
●Filipino Veterans Equity Compensation Fund
Agent Orange
Payments from any fund established in connection with settling liability claims concerning Agent Orange death or disabilities are not countable.
(Public Law 101‑102)
NOTE Agent Orange payments to survivors of deceased veterans are considered a resource.
Hemophilia Relief Fund
Payments made to hemophiliacs infected with HIV, as a result of class action lawsuits are not countable as income in the month received. Payment sources include, and are not limited to, all of the following:
●Susan Walker v Bayer Corporation.
●Ricky Ray Hemophilia Relief Fund.
●Any fund established by manufacturers of blood plasma.
●A follow-up to a release of all claims in a case entered into in lieu of class settlement. The release is required to be signed on or before the later of 12/31/97 or 270 calendar days after the release is first sent to the participant to whom payment is made.
NOTE Payments may be placed in an interest bearing account, or another investment that produces income. When this occurs, the interest income received on the account may be countable as income.
Nazi Persecution
Payments received by victims of Nazi persecution are not countable. This includes German reparation payments. (Public Law 103‑286)
Phen-Fen
Payments made as a result of Phen-Fen class action lawsuits to participants with medical conditions are not countable. Only ongoing payments intended for the current month as countable.
For NA, Phen-Fen class action lawsuit payments are countable.
Radiation Exposure Compensation Act
Payments received under the Radiation Exposure Compensation Act are not countable. (Public Law 101‑426)
The purpose of the act is to compensate for injuries or deaths resulting from exposure to radiation due to any of the following:
●Nuclear testing
●Uranium mining
Spina Bifida and Covered Birth Defect
Spina Bifida and Covered Birth Defect payments are not countable. (Public Law 104‑204 and Public Law 106-419)
Spina Bifida and Covered Birth Defect payments are Veterans Administration (VA) benefits paid to a natural child of a veteran when any of the following occur:
●The veteran served active duty in the Republic of Vietnam.
●The child was born with a covered birth defect (Including Spina Bifida).
USA Patriot Act of 2001
USA Patriot Act of 2001 payments are not countable. (Public Law 107‑56)
These payments are compensation for a victim of an act of terrorism or mass violence inside or outside the U.S.
Uniform Services Former Spouse Protection Act
The Uniform Services Former Spouse Protection Act (USFPA) payments are countable and considered income of the participant court ordered to receive the payment. (Public Law 97‑252)
The USFPA outlines that up to 50% of a participant's former spouse’s military retirement or pension funds may be diverted by court order for alimony, child support or property settlement.
When the participant is the former spouse and military retirement, or pension funds are diverted by court order for any of the following:
●Child Support
●Alimony
●Property Settlement
Victims of Crime Act (VCA) Benefits
Victims of Crime Act (VCA) benefit payments received by a participant are not countable. VCA payments are considered compensation for a victim of crime. (Public Law 103-322)
Wartime Relocation of Civilians Law
Payments to U.S. citizens of Japanese ancestry, and resident Japanese noncitizens under the Wartime Relocation of Civilians law, are not countable. This includes certain Aleutian and Pribilof Islanders from the any of the following villages:
●Akutan
●Atka
●Attu
●Nikolski
●Saint George
●Saint Paul
●Unalaska
(Public Law 100‑383, Section 206, effective 08/01/88)
Filipino Veterans Equity Compensation Fund
Created by the American Recovery and Reinvestment Act of 2009, the Filipino Veterans Equity Fund is for Philippine military veterans who served during World War II and their spouses. Eligible persons receive a onetime payment of up to $15,000.
Payments received from the Filipino Veterans Equity Compensation Fund are not countable.
Procedures
When the participant is present, have them sign the Authority to Release (FAA‑1765A) form to contact any companies or businesses involved. The FAA-1765A can be faxed or emailed to the participant's employer when it is not possible to use the Application for Benefits (FAA-0001A) or the HEAplus Authority to Release signed statement.
Verification
System interface and the case file(g) must be reviewed before verification is requested. No additional verification is needed when AZTECS interface or HEAplus hubs have verified the information.
The participant has the primary responsibility for providing verification. (See Participant Responsibilities – Providing Verification for additional policy.)
For NA, all of the following income is required to be verified before eligibility is determined:
●Reported on a new application, during the interview of a new application, or changes reported before the eligibility determination of a new application.
●Changes after an eligibility determination of a new application (e.g., a renewal application, mid approval contact, etc.) and any of the following apply:
The source of the income has changed.
The income is questionable(g) or unclear(g).
The reported income amount has changed by $51 or more.
The previous verification in the case file is more than 59 calendar days old.
For CA, all income is required to be verified before determining eligibility.
Examples of verification that can be used for Legal Settlements include, and are not limited to, any of the following:
●Assistance payments records
●Benefit award letters from SSA, Statement of Earnings VA, and other agencies
●Bank records
●Court records
●Current check reflecting gross income
●Federal or state tax forms
●Insurance policies
●Signed statement from the agency or payer providing the income
●Participant Statement verification when one of the following occur:
Obtaining documented or collateral contact verification may cause harm or undue hardship(g) for the participant.
When all of the following occur:
●Other attempts to obtain the verification have failed. This includes documented and collateral contact verification.
●The participant has requested assistance from FAA.
●The worker has evaluated the request for assistance and cannot obtain the verification from another acceptable source.
●The participant statement is not questionable(g).
AZTECS Keying Procedures
Key Legal Settlements that are countable as a resource using the LS Resource Code in the INC TYPE field on LIAS.
For NA, any portion of the settlement that is designated as a reimbursement, key the OX Unearned Income Code in the INC TYPE field on UNIC.
For CA, Legal Settlements received in payments, less any attorney fees, are countable as income in the month received. Key the OA Unearned Income Code in the INC TYPE field on UNIC.
Keying instructions for all of the following legal settlements:
●Agent Orange - Key the AO Unearned Income Code in the INC TYPE field on UNIC. Agent Orange payments to survivors of deceased veterans are considered a resource.
●Hemophilia Relief Fund Settlement - Key the OX Unearned Income Code the INC TYPE field on UNIC. (This income is not countable as a resource.)
●Nazi Persecution - Key the OX Unearned Income Code the INC TYPE field on UNIC.
●Phen-Fen - Key the PF Unearned Income Code in the INC TYPE field on UNIC.
●Radiation Exposure Compensation Act - Key the RC Unearned Income Code in the INC TYPE field on UNIC. (These payments are not countable as a resource.)
●Spina Bifida and Covered Birth Defect - Key the VA SB Unearned Income Code in the INC TYPE field on UNIC.
●USA Patriot Act of 2001 - Key the OX Unearned Income Code in the INC TYPE field on UNIC. (This income is not countable as a resource.)
●Uniform Services Former Spouse Protection Act - Key the OT unearned income code in the INC TYPE field on UNIC.
●Victims of Crime Act (VCA) Benefits - Key the OX Unearned Income Code in the INC TYPE field on UNIC.
●Wartime Relocation of Civilians Law - Key the OX Unearned Income Code in the INC TYPE field on UNIC.
●Filipino Veterans Equity Compensation Fund - Key the OX Unearned Income Type Code in the INC TYPE field on UNIC.
Document the case file(g) thoroughly to support keyed codes, amounts, and frequencies. See the AZTECS Data Entry Guide for instructions on keying the AZTECS income screens.
NOTE Documentation must support determinations of eligibility and benefit level. Document in sufficient detail to ensure that any reviewer can assess whether the determination is reasonable and accurate. Include specific information regarding the reason the income is determined to be normal. (See Budgeting Income Documentation Requirements for additional information.)
Legal Authorities
AAC R6-12-505
A.R.S 46-292-P01
7 CFR 273.9(c)(8)
7 U.S.C. 2014(d)
last revised 10/02/2023